A new commercial radio powerhouse to take on the BBC was created last night after GCap Media, home of Classic FM and Capital, agreed to accept £375m from rival Global.

The deal brings Britain's biggest commercial radio company under the control of privately owned Global, which is run by former ITV boss Charles Allen and is home to the Heart and Galaxy stations.

Allen said last night: "We believe that this is a very strong business with brands and assets that are highly complementary to those of the Global Radio Group."

As it vies with the internet for advertising spending, Global wants to be able to offer advertisers "an attractive national proposition".

The 225p-a-share deal concludes four months of haggling between the radio rivals which started with a 190p-a-share offer from Global in December.

Global was set up last year when its management team bought the stations of music and radio company Chrysalis with private equity money. Since then it has made no secret of its intentions to consolidate Britain's radio market.

Global turned its attention to GCap in January to gain critical mass. But GCap's board rejected the initial offer, describing it as "derisory".

Global's increased offer was too good for GCap's shareholders, which include fund manager Schroders and Daily Mail publisher DMGT, to pass up. Global is paying an 86% premium to the closing price of GCap's shares before it announced its approach in January.

GCap said it was recommending the Global offer to its investors in the "context of an uncertain advertising outlook." Shares in GCap have been under pressure over the last year and it has experienced a torrid time since its creation from the £710m merger of GWR and Capital Radio back in 2005.

Global takes on the integration of GCap at a particularly tough time for UK commercial radio stations. On top of challenges from a strong BBC, they are having to combat a slowing economy and growing competition for advertising spending from the internet.

Media experts Enders Analysis say commercial radio revenues in 2007 rose just 2.8% to £598.2m after declines of 5.2% in 2006 and 4.3% in 2005. In real terms, 2007 revenues were down by 1.4%.